WSJ: Li Lu emerges in Berkshire succession plan

[twacowfca]

According to the article, Lu's fund originally had a total of $150M in investment assets.  He put $40M into BYD, which would be worth $400M today.  The fund's value today is $600M, meaning that the original non-BYD capital ($150M-$40M = $110M) is now worth ($600M-$400M = $200M).  That's a return of 81.8% over six years (mid-2004 to mid-2010), or 10.5% annualized on non-BYD assets.  

 

Again, the return is the return, but I would prefer a longer track record for someone who is going to handle billions and billions at Berkshire.  Cheers!

 

Would have to agree with this one. It is smart to piggy back on one company but the greatness of Buffett is that he built his empire on multiple bets over a period of time.

 

Agreed.  A long record is better than a short record, but a medium length record using an A+ process may be a strong indicator of future success.  :)

[shalab]

but a medium length record using an A+ process may be a stroke indicator of future success.

 

The key here is "may be". A lot of investment managers stumble at different levels of capital. So what one can do with 1 million is different than what one can do with 100 million. Managing 100 million is different than managing a billion not to speak tens of billions.

 

 

[Munger_Disciple]

From my reading of the WSJ article, Buffett while praising Li Lu, seems to be hedging his bets regarding the choice of future Berkshire investment managers. Munger on the other hand seems to imply that Li Lu'0s appointment is almost a done deal. Anyone else thinks this is curious?

[ExpectedValue]

From my reading of the WSJ article, Buffett while praising Li Lu, seems to be hedging his bets regarding the choice of future Berkshire investment managers. Munger on the other hand seems to imply that Li Lu'0s appointment is almost a done deal. Anyone else thinks this is curious?

 

I believe the plan is to still have what, 3 or 4 different CIOs? To me that already is Buffett hedging his bets.

[Munger_Disciple]

I believe the plan is to still have what, 3 or 4 different CIOs? To me that already is Buffett hedging his bets.

 

Buffett also seems to be hedging on the timing of when he may bring in one or more outsiders to manage Berkshire funds.

[Parsad]

Buffett never tips his hand...at all!  While we all appreciate the frankness of Munger, Buffett never lets you know his cards, and again, I find it difficult to believe Buffett will annoint one investment successor when he is gone (Lou Simpson was the exception, and the results are extraordinary).  Berkshire will have no less than two CIO's and I would bet at least four will be on the team.  This guy worries about the most unlikely scenarios and it won't matter if Munger is really high on Lu.  Cheers!

[mountboney]

Despite the press and CNBC running wild with this one, I've never seen a reference from Buffett or Munger for less than 3 investment managers.  I'd be comfortable with Li Lu as one of 3 but not as the sole manager.  BYD may do fantastic over the next 10 years, but it is a bet on them being able to ride the wave of a mass transformation to solar energy, transformative batteries, and electric cars.  Charlie is convinced of these changes and he's probably right but betting on one company to lead the technology and create value is not a sure thing.

 

My limited reading on Lithium batteries led me to believe there is a serious problem with the weight and a breakthrough is needed to utilize air rather than water.

_______________

 

"Theoretically at least, lithium-air batteries could provide about 10 times the energy density – the amount of energy stored per kilogram – than the roughly 200 kilowatts per kilogram that cutting-edge lithium-ion batteries now provide, said Spike Narayan, the functional manager for science and technology at IBM's Almaden research lab.

 

The main challenge metal-air batteries pose is that it's very hard to reverse the chemical reaction that provides their energy without putting more energy into it than you'd get out of it. Meaning: Short of replacing the chemical components of the batteries, they can't be recharged, Narayan said.

 

It's a problem researchers have been trying to figure out for decades."

 

Greentechmedia.com

_______________

 

Lot's of VC money, IBM, and others are working on this problem.

[scorpioncapital]

This article drives home to me the point that there is risk in succession. Despite the quibs about running Berkshire from beyond the grave, there is a real risk when you pass the reins on to the next generation, maybe not so much in managing what is already built, but in growing forward.

[CruiseTown]

Can someone help explain why doesnt he have any 13F-HR filings? Isnt he running more than $100M?  Thanks

[maxprogram]

I believe the $100M rule only applies to long public US equities/options (including ADRs that trade on US exchanges). So if all your US-traded holdings are under $100M, you wouldn't file a 13F. Li probably has most of his fund in equities traded on foreign exchanges.